Livret A Interest Rate Set to Drop to 1.4%: What It Means for French Savers

Livret A to Drop to 1.4% in February 2026

If you’re living in France and have a Livret A savings account, prepare for a further dip in returns. The Banque de France is set to lower the Livret A rate from 1.7% to 1.4% starting February 1, 2026. This would mark the lowest rate since early 2022, reflecting the slowdown in inflation and falling interbank rates across the eurozone.

For many British, American, and other expats using the Livret A as a simple, tax-free place to hold euros, this news might come as a disappointment. It’s a reminder that even trusted French savings staples can lose purchasing power when inflation cools and interest rates adjust.

A Rate Halved in Just a Year

At the start of 2025, the Livret A still offered 3% interest — double today’s rate. The drop highlights how quickly the economic environment has shifted in France. With inflation down to 0.8% in December 2025 and the Euro Short-Term Rate (€STR) now near 1.93%, the formula used to set Livret A’s yield automatically leads to a reduction.

For expats holding the maximum Livret A balance (€22,950), this change will mean earning roughly €69 less per year in interest. Although still tax-free, the Livret A’s real return will be close to zero after inflation.

The Banque de France’s Perspective

Speaking on France Inter, François Villeroy de Galhau, Governor of the Banque de France, confirmed that the new rate would “remain significantly above inflation.” However, he also reminded the public that he can override the standard formula in exceptional circumstances — something he has done before to protect household savers during unstable economic periods.

This flexibility allows the government to maintain confidence in regulated savings accounts while keeping the system aligned with European Central Bank policy.

LEP: Still France’s Best-kept Secret

For those eligible, the Livret d’Épargne Populaire (LEP) remains far more rewarding. Though expected to fall slightly from 2.7% to around 2.4%, it still outperforms inflation and the Livret A by a wide margin.

However, the LEP is income-restricted. Out of 31 million French residents who qualify, only 12 million currently take advantage of it. Many expats who pay French income tax but have moderate earnings might be eligible — yet few think to ask their bank.

To open a LEP account:

You must be officially tax resident in France, and
Your revenu fiscal de référence must be below a certain limit (around €22,000 for a single filer).

Banks will ask for a copy of your latest avis d’imposition (tax statement) to confirm eligibility.

If you meet the criteria, it’s one of the safest and most profitable ways to keep short-term funds in France.

Assurance-Vie and Other Attractive Alternatives

While Livret A savings are declining, assurance-vie policies are seeing a strong comeback. At the end of 2025, total assets reached €2.1 trillion, up 6.5% year-on-year. With average euro-fund returns between 2.5% and 2.6%, assurance-vie now clearly outpaces Livret A.

For expats living long-term in France, assurance-vie offers unique benefits:

Flexible investment options in euros and funds.
Tax advantages after 8 years of holding.
Estate planning advantages for cross-border residents.

Other saving or investing routes to consider in 2026 include:

PEL (Plan Épargne Logement) – a long-term housing savings plan with stable interest.
ETFs or stock market investments – higher risk, but potential for real growth.
Sustainable funds (ISR or ESG) – combining returns with ethical investing.

What Expats Should Do Now

If you’re an expat using Livret A simply as a safe and liquid emergency fund, there’s no need to panic — it still serves that purpose well. However, those looking for better returns should consider diversifying their savings strategy in France.

A good approach could be:

Keep 3–6 months of living expenses in your Livret A.
Check your eligibility for the LEP.
Explore assurance-vie for medium or long-term goals.
Seek advice on currency exposure if you move funds between euros and pounds sterling.

Final Thoughts

The upcoming reduction in the Livret A rate underscores the end of high-yield savings in France — at least for now. For expats managing their money in euros, this is an ideal time to revisit your strategy, ensure your funds are working efficiently, and take full advantage of all options available to residents.

The French savings landscape is changing, but opportunities remain for those who stay informed.